The Graeme Lowe Otago fellmongery, which strips and salts sheep, lamb, goat and calf skins ready to be processed into leather at other plants, closed in July with the loss of 60 jobs.
A smaller operation was established in Mataura at the former Carter Holt Harvey paper mill.
Trevor Penny, who has lived across the road from the Green Island plant for 15 years, said he "did cartwheels" when the plant closed and for sale signs went up.
He and partner Janette Mann had lived with foul smells, the relentless drone of machinery, and noise from staff and vehicles at all hours of the day and night.
They began building a deck at the back of their house thinking they could finally have friends around for barbecues.
But their happiness turned to horror when they noticed activity at the plant last week and the arrival of staff, machinery, trucks and product this week.
"One week it was all over rover and everything was sweet," Mr Penny said on Thursday.
"The next week they were back again. It's put the wind right up me."
Other neighbours were also upset, he said.
Rumours had been circulating in Green Island for a few weeks that the plant might reopen but residents had not heard anything officially, Mr Penny said.
"They have been pretty sneaky about this. Not even a note in our letterboxes.
"A bit of communication would have gone a long way."
The Lowe Corporation did not return telephone calls from the Otago Daily Times last week or this week.
However, commercial manager Phil Hocquard told Gore community newspaper The Ensign this week the company had closed its Mataura plant and was returning to Green Island because of complaints about seepage from the Mataura plant into the Mataura River.
The Mataura plant employed eight to 10 staff and some had relocated to Green Island, he said.
Environment Southland compliance officer Chris McMillan said yesterday the Mataura operation was investigated after a member of the public complained about "funny colours in the river and a slightly salty smell".
It was discovered salts and blood from the green pelts were leaking into the river through cracks and holes in the floor of the old building.
The company was issued with an abatement notice last month and given three weeks to stop the seepage.
Although the company had tried to remedy the problem, the building could not be repaired and the company said it was moving out of the building and out of Mataura, Mr McMillan said.
The Green Island plant has also been the subject of regular noise and smell complaints.
In August, Colyer Mair Ltd, which trades as Graeme Lowe Otago, was fined more than $26,000 by the Environment Court after admitting two charges brought by the Otago Regional Council of breaching air discharge consents and emitting offensive and objectionable odours.
Otago Regional Council staff member Marion Weaver said yesterday Lowe Corporation did not have to obtain a fresh consent to reopen the plant because its existing discharge to air consents were valid until 2020.
Dunedin City Council acting resource consents manager Doug Spittle said the company was able to reactivate its operations at Green Island whenever it chose as the plant was a complying industrial operation on an industrially zoned site.
